Earnings call transcript: Elemental Altus sees record revenue in Q2 2025

Elemental Altus reported a strong performance in its Q2 2025 earnings call, with record revenue of $10.5 million, doubling from the previous year. The company also saw a significant increase in adjusted EBITDA, which rose by 150% year-over-year to $8.8 million. The stock, currently trading at $1.44, has shown remarkable strength with a 74% year-to-date return. According to InvestingPro analysis, the company appears slightly undervalued based on its Fair Value estimate.

Key Takeaways

• Record revenue of $10.5 million, a 100% increase year-over-year.
• Adjusted EBITDA grew by 150% to $8.8 million.
• Operating cash flow increased to $14.4 million.
• Stock price fell by 0.5% to $2 post-earnings announcement.
• Strong liquidity position with $80 million available.

Company Performance

Elemental Altus demonstrated robust growth in Q2 2025, with revenue doubling compared to the same quarter last year. The company attributes this growth to significant contributions from its Karali Sud royalty and increased production from key assets like Kalawinda and Casarena. The company also highlighted its unhedged exposure to gold and copper prices, which has supported revenue growth amid favorable market conditions.

Financial Highlights

• Revenue: $10.5 million, up 100% year-over-year.
• Adjusted EBITDA: $8.8 million, a 150% increase year-over-year.
• Operating cash flow: $14.4 million, up $1.5 million from last year.
• Cash position: $30 million, with an undrawn credit facility of $50 million.

Outlook & Guidance

Elemental Altus provided guidance for 2025, projecting gold production between 11.6 and 13.2 GEOs and revenue between $35 and $40 million. The company is also considering a potential US listing to improve liquidity and is focused on organic growth and acquisitions.

Executive Commentary

• "We are at this inflection point, where higher revenue is translating into cash flows," said David Baker, CFO.
• CEO Fred Bell stated, "We have the ability with our strength of our balance sheet to both grow on an organic basis and look at public and private portfolios."
• Bell also mentioned, "The US listing absolutely makes sense, and it’s a matter of when, not if."

Risks and Challenges

• Market volatility in gold and copper prices could impact revenue.
• Potential delays in the US listing could affect liquidity.
• Consolidation trends in the royalty market may increase competition.
• Higher tax accruals could pressure profitability.
• Dependence on cornerstone assets for revenue growth.

Elemental Altus’s Q2 2025 performance underscores its strong position in the royalty market, backed by a solid balance sheet and strategic growth initiatives. However, the slight dip in stock price suggests that investors remain cautious, possibly due to broader market conditions or specific company challenges.

Full transcript - Elemental Royalties Corp (ELE) Q2 2025:

Fred Bell, CEO, Elemental Altus: Hi, all. Thank you for attending this q two call for Elemental Altus. We’ll just give another minute here as a few people are still joining, and we should kick off momentarily. Right. I think that’s, I think we’re we’re ready to go now.

So thank you everyone for coming in today on the 08/19/2025 to run through Elemental Analysis q two, financials. With us today, you’ve got myself, Fred Bell, the CEO, and David Baker, the CFO. In terms of, in terms of an update on the company and and where we’re at, I think it’s the the same story with Telegraph really for the last two quarters, which has been continuing cash build. We’ve paid down the the company’s debt. We’ve had record revenue for for q one and for q two, putting us in a very strong position.

We also had a payment related to the mainstream previously that we received in April that was just under 10,000,000 US dollars equivalent, combined with the Karali royalty that started its its first payments to us, from q one onwards. So I think, for for both of those material events and puts us in a position today where we have between the credit facility and cash on the balance sheet, approximately 80,000,000 US dollars that we can deploy, both from from cash on hand and and credit facilities. And then also materially during the quarter, we had a new investor that came on the register in Tether Investments. And I think for for in terms of their desire to grow the company and for us to continue to build out the portfolio, very strong backing from them to really deploy that capital and and puts the company in the strongest position. It was already in the strongest position it’s ever been in, but puts us in the strongest position going forward in terms of our ability to progress acquisitions and and and build the company forward.

And I I won’t say more than that, and I will hand over to Dave to run through the the quarter’s numbers and and talk through some of the the nuances in a bit more detail.

David Baker, CFO, Elemental Altus: Super. Thanks, Fred. Yeah. Excellent second quarter, across all, all metrics. Adjusted revenue, 10.

That’s doubled year on year. Adjusted EBITDA of $8,800,000, that’s up a 150% year on year. And I think more importantly, adjusted cash flows, operating cash flows here at $14,400,000, That’s up for about a million and a half dollars from this time last year. That’s really, reflective of our record q ones. We got that bulk first revenue from from Kerali Sud, that was all received, in q two.

And this is really reflective of a strong strong production base. So nearly three and a 3,200 GEOs in q two, up 44%, and a record of GEOs of nearly, 7,800, for h one. It’s a record for the company. That puts us on track, to hit geo guidance of 11.6 to 13.2. That’s up nearly 4040%, year on year at the midpoint.

But importantly, with, the gold price where it is, we’re very happy to increase revenue, guidance to 35, to 40,000,000 US dollars, and that’s a record for the company. Karali Sud, a lot of the growth today has been driven by Karali Sud. It’s already generated, $9,100,000 year to date, in in royalty revenue. On top of that, it’s also triggered two milestone payments totaling $3,000,000. So it’s a real, an excellent contributor to the portfolio.

Balance sheet is as strong as it’s ever been, since the beginning of the company. As of today, we have $30,000,033.00 dollars in the bank, and that alongside with our, credit facility with National CIBC and RBC of $50,000,000 undrawn gives us $80,000,000 of, liquidity, which I think is excellent for a company of our size. Really, these results are underpinned by the cornerstone producing royalties. So let’s talk about Kalawinda and Casarena’s. A couple of excellent quarters on our cornerstone assets, over 32,000 ounces produced.

A carloader in the quarter that achieved the upper end of their guidance of a 117,000 ounces to June, which is which is excellent for for them and excellent for us. Most importantly, they’ve had their expansion, approved, their regulatory approval for that expansion, which gets them to a 150,000 ounces of gold, a year. That gives us a 30%, uplift, that we get a free carry on and, yeah, strong future upside for our royalty there. Again, excellent quarter at Casa Rones as well. Lundin Mining have maintained copper guidance of 115,000 to 125,000 tonnes of copper.

We see some upside, in these numbers. Lundin are talking to higher grades expected in q two driven by strong cathode production. So we’re very confident that I’ll hit hit guidance there. I mean, Casarena is just a wonderful cash flow contributor for for the company. Alongside the cornerstone assets, our other producing royalties are doing exceptionally well.

Bonacro had a great quarter. So 23 and a half thousand ounces, up from 17, nearly 18,000 ounces last year. Obviously, we now have the full contribution, from from, from Bonacro following the AlphaStream acquisition last year. Production is on track, expecting higher grade materials in the second half of the year through 2027. So again, Bonacro is producing some pretty staggering numbers at these current gold prices.

We had a higher than expected quarter from Kerali Sud, again, another excellent performer, coprocessing. And that was really driven by the ability to coprocess, materials. So blending Kerali Sud oil with Sadiola, that commenced in May. And we really think that is going to be a serious contributor to the long term nature of the Keralisud royalty. So $2,500,000, again, heavily weighted to q one, because of all of that revenue that we received in in q one that was from 2024 production.

But, yeah, has already, Kurali Sud’s already, exceeded our expectations, year to date. Wahgnion, we have still, paused accruing revenue at Wahgnion while the government undertakes the external audit. Communication with, management there and the external auditor, and we expect payment in 2025, from Wahgnion. These royalties, they’re translating, as you can imagine, into record financial outcomes. So in terms of the numbers, as I said earlier, adjusted revenue, has doubled year to date.

So 10 and a half million dollars, translating to adjusted EBITDA of 8 and a half million dollars and operating cash flow. We did book, higher depletion and higher tax accruals as a part of cleaning up the business. And so we booked those in Q2 but still managed, to turn a small profit, and taxes higher in the period, due to stronger revenues in the period as well. Behind these numbers, we’ve put together a free cash flow bridge. So you can see that, revenue plus Casarena’s dividends, Casarena’s dividends are there after tax.

We’ve got higher tax outflows, than quarter on quarter. Again, that’s just due to stronger revenues, and working capital. That’s, the timing working capital reflects, Karali Sud, inflows, in the period, which really leads to that free cash flow of $9,700,000 trying really that scalability of the model that we have. If we step back and then look at how that’s impacted the cash position, so we started the quarter with $4,800,000 of cash in the bank. That $9,700,000 of free cash flow plus the settlement that we received from Ming gets us to 24 and a half million dollars in the bank at the end of the quarter.

So nearly $20,000,000, of growth in cash, through the quarter. And since subsequently, we’ve had, royalty revenues come in. So we’ve now got $30,000,000 in the bank, as of today. This really does show through on our, on our operating results, here. We just point out that we still do treat, Casaronis as a profit, of associate.

So that comes in the gain there. So that’s the post tax profits comes in as that share of profit from associate item. We also had a, and we have an investment in a Tyrion PLC. We could also use the same treatment, associate treatment for Tyrion. Given we’ve ticked down below 20%, we’ve reclassified that as an investment.

So, we, recorded a, non cash impairment of one point, $46,000,000, but that will be a lot easier, to monitor for us going forward. In terms of, the results, the direction of travel is pretty clear. Adjusted revenue doubling year on year, that $10,500,000 GEOs up, 44% year on year to nearly $3,200,000 We do, reiterate guidance, of that 11.6 to 13,200 ounces, and we have upgraded that revenue guidance using a 3,000 gold price of 35 to 40,000,000 US dollars for 2025. EBITDA growth is following exactly the same trajectory, up a 155% year on year. These, EBITDA and margins are at record levels for the company, and that growth is driven by scale, cost discipline, and then combined with strong, gold prices for this track record of sequential EBITDA growth through 2025.

And this really does come through to the cash generation of the company. We are at this inflection point, where this higher revenue is translating into cash flows. Those record 2021 revenues fall into 2022, operating cash flows and really shows that scalability of the model. Higher revenues are just directly driving higher cash flows with that continued strong exposure to rising gold and copper prices, which we are completely unhedged. So we are, as a company, in the strongest financial position in our history, supported by, long term investors.

As Fred said, Tether joined the register in the quarter, which is, which is fantastic, and and we’re really supportive, of what, they’re trying to achieve and and the path of growth that we have ahead of us, with Tether. We also have incredibly supportive shareholders, not least, Paul Stevens, Adrian Day, Deutsche Ballotine Capital. Consensus target price, not updated for today’s, updates, but, prices today was, just over $2.43. So it’s still plenty to go on the share price, and, the balance sheet is as strong as I said it would have been $30,000,000 of cash in the bank, zero debt, and a fully fully undrawn $50,000,000 facility for, transactions. And so, Fred, I might pass back to you to run through the, the highlights, and then, we can open up the floor to q and a, which is available in the q and a section of your app.

Fred Bell, CEO, Elemental Altus: Thank you, Dave. And, look, I appreciate everyone. That was that was relatively, you know, rapid run through, very efficient from Dave there of of the numbers. And if anyone’s got some follow-up questions after this, always welcome to talk through talk through those. I think the the key aspect for the company is is really when you look at it in the bigger picture, this was a company that started, and I think our biggest hurdle, in year one to year four was really lack of capital and and the fact that we have probably in our history syndicated transactions worth, I think, five times probably worth a combined $100,000,000.

And that is a position that we’re we’re we’re not in today, where if we saw those opportunities, we could progress them ourselves. So I think that’s a a key difference in terms of where the company sits when you look at the bigger picture versus where we have been historically, with a with a team that has more experience than we have ever had. We’ve transacted across multiple jurisdictions, across different commodities, many different counterparties, and from exploration stage all the way through to producing producing assets. And so we’re today in a place where we’ve got organic growth embedded in the portfolio. We have record record cash on the balance sheet, ability to deploy that cash as well.

And I think one thing that we we didn’t touch on too much, but as it’s a good example from our portfolio, and that was the Laverton royalty that was acquired by by Genesis in the quarter. And for us, that’s been a really key development asset that we haven’t been able to say a lot about because of the previous owner indirectly, Shandong. And I think now in the hands of a a well very well run mid tier Australian miner in Genesis, I think there’s there’s gonna be a lot of progress on that royalty over the coming years in terms of adding value. So for us, good to see an asset like that that’s been in our development portfolio since 2021 really go into a good home with a good operator in in WA, and and we should have some good news flow from that over the next twelve, eighteen months. So, look, I think that that really summarizes it and open the floor to to any questions.

David Baker, CFO, Elemental Altus: Thanks, Fred. We can, we can talk to a question from Adrian, Adrian Day. Adrian, hope hope you’re doing well. There’s a question. Is is there a cost, to the unused line of credit?

Yeah, don’t. So there is a standby fee, that’s typical for these facilities. So ours is 23% of the margin. So if the sofa margin on top of sofa on our facilities at the low end, so that’s 2.75%. So we pay 23 percent of that.

So just less than a bit less than a percent, a bit more than half a percent, on the unlimited side of credit. And and the reason that that is a cost for us, it really does allow us to get, that’s the cost of being accuracy actually, being able to access that that that facility a moment’s notice. So that’s a fully credit approved, facility available to us. So so there is there is a standing standby charge for that. So, Fred, maybe from Brian Brian, McArthur, can you go through when you expect the Deeba milestone payments?

Fred Bell, CEO, Elemental Altus: Yes. And for the benefit of everyone else, this relates to our Kuralee Sud royalty, which has been renamed from Diva with Allied Gold, and that went into production at the the end of last year. We received our first royalty payments following q one and our second royalty payments now. That royalty also had some milestone payments associated with it. So we we received the first one, and we had some we actually had a a second and third milestone payment related to commercial production, and then there is also going forward milestone payment related to hitting production threshold.

So I think we we should have an update on that imminently. I think with, Karali said, we had some of those, some of those payments, along with the permits in Mali took a bit longer from the end of last year to come through. And I think it was on the fifth or the May 7 that Allied got permission for coprocessing there, which is really positive for the royalty because it means that they can they can blend the oil from our license with what they have at Saudi Arabia already, which is a better result for the mine. It’s better result for us as royalty holders. It’s a better result for the government.

And so I think, some of those, calculations on on, on the amounts and and payments, I think there’s a bit of a backlog there, but we should get all of that, sorted, in in this in this quarter.

David Baker, CFO, Elemental Altus: Absolutely. Another question from Adrian, Fred about the opportunities in in the space, and, I think Adrian’s referencing consolidation. So talking to the difference between, the numb you know, some of the royalty companies that are in the $500,000,000 range and then the gap to to Triple Flag and Cisco at at 5,000,000,000.

Fred Bell, CEO, Elemental Altus: Yeah. It’s a look. It’s an interesting comment, and thank you, Adrian. I I think if you look back over over the last five or ten years in the royalty space, you’ve seen people like Nomad, Mavericks, and more recently Sandstorm, who have sat in that sort of 500,000,000 to $2.02 and a half billion dollar space. You have seen them all being consolidated, acquired, merged, combined, and and the result is there is a enormous gap now between where I think most of the junior royalty companies are and and where the the really two what will be remaining mid tiers in in triple flag and and a Cisco set.

So, like, I think there’s a there’s a there’s a huge opportunity there, obviously. For us, we’re very much we have the view that we have the ability with our strength of our balance sheet to to both grow on an organic basis, but also looking at public and private portfolios where they make sense. And we have always done that throughout our company’s history. And as the name says, Elemental and Altus, we have done a merger in the past. I think very open to where it makes sense.

And I think that for us in in the short term, we have a number of royalty opportunities that we’ve been very keen to progress, but but certainly keeping an eye on on where we can do things that that do make sense and, and move up into that into that gap that you alluded to.

David Baker, CFO, Elemental Altus: Perfect. Thanks, Fred. I’ll do a quick one. Question from James, James Fraser on are we earning interest on the cash balance? And if so, what percent?

Hi, James. Yeah. Absolutely. So we sweep all excess cash into an instant access account, and that jumps around with Canadian, prime, rates. But at the moment, about about 4% we’re getting on on the cash balance.

Friend, sort of we’ve got two questions. One from Piers Lord and it relates into a larger question from from Stefan Gleason on, do we have any guidance or or time on on The US listing? Any US listing, and how beneficial do you think that will be to accessing new investors, increasing liquidity on the stock, which is Pierce’s question, etcetera.

Fred Bell, CEO, Elemental Altus: Thank you, Stefan and Pierce, for those. I think look. We have talked to this probably with both of you individually, but we’ve also had this question from shareholders and and the management view has always been that The US listing absolutely makes sense, and it’s a matter matter of when, not if. So I think that you saw at our at our AGM, we had approval for a share consolidation that we included in those materials. And I think that for us, looking at that that US listing, it’s I think we’re probably the only one of our peer group that doesn’t have The US listing.

And and nowadays, that market accounts for the vast majority of trading in in all of our peers. So it it definitely makes sense, and we we’re we’re working on progressing that. And when we can, we will we’ll definitely say something. But I think for us, that will be one of the key key key actions to to improve liquidity as well moving forward.

David Baker, CFO, Elemental Altus: Perfect. Question from, Paul, Paul Rankin. Paul, hope you’re doing well. Is there any evidence of of cost inflation, accelerating across the portfolio? I can chime in, I guess, to start with.

I guess the beauty of the royalty model is that we are somewhat insulated from from the costs, at a mine level. Obviously, so long as the costs aren’t so high that, it affects the the overall and underlying profitability of the mine. So I guess not directly. I would point that the only producing NPI in our portfolio is one of our little royalties on Mount Pleasant operated by Zidgen. And that actually had a record quarter for us.

Now, numbers, only a couple of $100,000, but that actually, the the only royalty we have linked to to profitability had a had a record quarter on that front. So clearly, at that operation, the rise in Australian dollar gold prices, is outpacing, on on, on the ground costs, but it’s gonna be different at every operation. And Fred, maybe there’s a sort of higher higher level, question from from JJ, Sowers. Is, is there a take on the, and maybe relates to to Tether as a shareholder. What’s our take on the Trump administration revaluing gold or and or linking to future treasury bonds maybe as a real world asset on the blockchain, sort of a long term view on gold and tokenized gold?

Fred Bell, CEO, Elemental Altus: Look. Well, thank you, JJ, for that question. I think probably too specific for us to answer with any degree of accuracy or certainty on this call, but it it’s a good it’s a probably a good point to mention that it’s it’s certainly, I think, attracted a lot of interest in Tethr’s involvement in the space coming in. They have been publicly on the record as a large purchaser of physical gold in the market, and this was the first move they have made into the the mining space as such and into a royalty company. So, look, for for us, it’s actually been yeah.

I think it’s been, you know, very positive to have someone with such a exposure to to gold and desire to increase our exposure to precious metals on the as our major shareholder moving forwards and and really with the ability to help the company grow. And they’re coming in at a point where we were already going to hit record quarters in terms of the company’s performance before the gold price and and and without Teva. So the combination then of of the gold price and Tether’s involvement, it’s it’s really put the company in a very strong position. And I think that, you know, it’s it’s interesting to to to see investors in in that space starting to perhaps make a move over and increase our exposure in the gold space. So it’ll be definitely interesting to to watch going forward.

But for us, really focused on the day to day business of of adding value through good quality royalty acquisitions and building out the portfolio. And I think as we have as we have said in the last maybe two of these calls, I think we we we always knew we’d be in a very strong position coming into the the first half, second half of this year as a company. And I think as we sit today, this is a great opportunity for us to to really make some good quality acquisitions, build out the portfolio, work on improving liquidity that some of the shareholders mentioned with some specific plans on that front, and I think putting us in a very strong position moving forward.

David Baker, CFO, Elemental Altus: Perfect. Thanks, Fred. That is the end of the questions. No more questions. So maybe just head back to you, Fred, to sum up.

Fred Bell, CEO, Elemental Altus: Look. Thank you everyone for joining. And as ever, we actually do enjoy getting questions and calls from shareholders or investors. So, please, if there was anything that you think of afterwards, feel free to drop us an email or or try and give us a call, and we’ll, we’ll we’ll get back to you as soon as we can. But thank you as well for your time today listening in, and, wish everyone the best for the rest of the day.

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